Looking to diversify its operations, private agribusiness giant Louis Dreyfus Commodities announced Tuesday it will acquire Texas-based Imperial Sugar Co. for about $78 million in cash.

The deal includes the Imperial Sugar Refinery in Port Wentworth.

Louis Dreyfus will pay $6.35 per share, a 57 percent premium to Imperial Sugar’s closing price of $4.05 Monday. Imperial Sugar currently has approximately 12.2 million shares outstanding, according to Fact Set.

The proposed transaction has been unanimously approved by Imperial Sugar’s board of directors, who have agreed to recommend the company’s common shareholders tender their shares in the offer.

The total value of the deal is about $203 million, including debt and pension liabilities, the two companies said Tuesday.

“This is a compelling transaction that delivers significant value for our shareholders while offering financial stability and the organizational resources to allow us to continue to meet the needs of our customers,” John Sheptor, Imperial Sugar president and CEO, said in a prepared statement.

The transaction is expected to be finalized in the second quarter, at which point more details regarding work forceand operations will be available, said Imperial Sugar spokesman Clint Woods.

“Imperial has been informed that Louis Dreyfus intends to continue operations at all its industrial facilities,” Woods said.

Not unusual

Bill Hubbard, president of the Savannah Area Chamber of Commerce, said it’s not unusual for international companies to look to the U.S. market for growth and investment opportunities.

“Despite our challenges, the United States is still one of the most stable countries in the world,” he said.

“Savannah is a community used to working with international business, and we look forward to welcoming Louis Dreyfus.”

Mikael Morn, CEO of Louis Dreyfus, said Imperial Sugar fits well into his company’s plans to grow and diversify.

“Imperial Sugar is a well-established operator in the sugar industry in North America,” he said. “This transaction is an important step forward in our plan to grow and diversify our global sugar activities from sugar cane crushing and international sugar trading into sugar refining and distribution in major consumer markets.”

Imperial Sugar’s agreement to a takeover comes as the company has struggled for the past four years to stabilize its bottom line following an explosion in February 2008 that took 14 lives at the Port Wentworth refinery, injured dozens more and triggered a slew of lawsuits.

Many of those suits filed by victims and survivors remain pending as the company fights with its insurance companies over who will pay the legal fees.

Added to the troubles lingering from the explosion has been the high cost of raw sugar, which Imperial has been unable to pass on in full to consumers, squeezing its margins and leaving it struggling to repay debts, according to the British online commodities journal Agrimoney.

“Of the $203 million valuation placed on Imperial Sugar by Tuesday’s deal, only some $80 million represents equity, with the balance in borrowings and other liabilities,” the journal said.

Long history

Savannah has had a sugar refinery on the banks of its river for nearly 100 years, beginning in 1916, when Louisiana businessman Benjamin Alexander Oxnard and his partner Richard Sprague made the radical decision to move their New Orleans refinery to Savannah.

Operating as the Savannah Sugar Refining Corp., they acquired some 30 acres fronting the Savannah River near Port Wentworth. A year later, the plant produced its first refined sugar.

Nearly 400 people migrated to Savannah from Louisiana to help run the refinery. By the late 1950s, the refinery had become the major employer of a newly incorporated Port Wentworth.

As with any commodity, the sugar business has had its ups and downs. But in the 1980s the company, by then known as Savannah Foods and Industries, really began to shine. In January 1990, the Savannah Morning News reported Savannah Foods’ stock had risen more than 3,000 percent in the previous decade, noting that a $31,818 investment in the company made in 1980 would be worth a cool $1 million in 1990.

Seven years later, the company was acquired by major U.S. sugar producer and marketer Imperial Holly Corp.

In 2007, the refinery celebrated its 90th anniversary. A year later, the catastrophic explosion reduced much of the plant to rubble and closed the facility for more than two years.

In June 2009, a rebuilt Imperial Sugar opened, just as the price of raw sugar was climbing, making it difficult to recover.

ABOUT LOUIS DREYFUS COMMODITIES

Founded and based in Europe, Louis Dreyfus Commodities is a world leader in the processing of agricultural products and the merchandising of a diverse range of commodities. The company’s subsidiary, Louis Dreyfus Commodities LLC, has a highly diversified agricultural business in North America and operates in the cotton, grains, oilseeds, sugar, coffee and juice markets For more information, go to www.ldcommodities.com.

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